A Peer Reviewed Publication of the Boston Bar Association

by Colin Korzec and Mary H. Schmidt

Case Focus

On October 16, 2017, the Massachusetts Supreme Judicial Court issued Ajemian v. Yahoo!, Inc., 478 Mass 169 (2017), which holds that federal law, specifically the Stored Communications Act, does not prohibit an email service provider from disclosing email content to a decedent’s personal representative. This ruling is significant to the fiduciary community in Massachusetts because it helps define post mortem ownership of digital assets.

Background

The issue in Ajemian v. Yahoo arose after John Ajemian died from a cycling accident. His brother and sister were appointed personal representatives of his estate. The personal representatives knew that their brother had a personal Yahoo email account, which they wanted to access as part of the estate settlement process. Yahoo refused their request for access and refused to disclose the account’s contents, citing what Yahoo considered to be a prohibition on disclosure imposed by the federal law known as the Stored Communications Act (18 U.S.C. §2701 et seq.)(the “Act”).

The Act was enacted in 1986 to create Fourth Amendment-like privacy protection for email and other digital communications stored on the internet. It limits the ability of the government to compel information from internet service providers. In addition, it restricts internet service providers’ ability to reveal information to nongovernment entities. Both civil and criminal penalties are provided for violations of the Act. The Act protects the privacy of users of electronic communications by making unauthorized access to electronic communications a criminal offense.

Yahoo claimed that the Act prohibited it from disclosing private emails to the personal representatives unless a specific statutory exception applied. According to Yahoo, no such exception applied in this instance. In addition, Yahoo maintained that the terms of service agreement that the decedent had agreed to when he created the email account gave Yahoo the discretion to refuse the personal representatives’ request. As a result, Yahoo was concerned with potential liability if it turned over the contents of the decedent’s email account to personal representatives absent specific authority in the the Act.

Yahoo prevailed in the probate court, which held that the requested disclosure was prohibited by the Act. The court also concluded that although the estate had a common-law property right in the account’s contents, disputed issues of material fact concerning the application of the terms of service agreement precluded summary judgment.

The SJC Decision

The SJC held that the Act did not prohibit Yahoo from voluntarily disclosing the contents of the account’s email communications to the personal representatives because the Act contains an exception that allows disclosure based on lawful consent (citing Section 2702 of the Act). The personal representatives argued that they could consent to release of the account’s contents because the account was property of the estate and therefore receiving the account’s contents would effectively allow them to take possession of estate property in their normal capacity as personal representatives. In contrast, Yahoo argued that under the Act lawful consent could come only from the account’s actual, original user.

The SJC disagreed with Yahoo and held that Yahoo’s interpretation of lawful consent would preempt state probate and common law, specifically state law allowing a personal representative to provide consent on behalf of the decedent, without any clear congressional intent to do so. The SJC, however, held that while Yahoo may divulge the content of the decedent’s communications, Yahoo is not required to do so if its terms of service agreement provided otherwise.

On the issue of whether Yahoo could the use the terms of service agreement with the decedent to limit access to the account by the decedent’s personal representative, the SJC divided. Yahoo argued that the terms of service agreement granted Yahoo the right to deny access to, and even delete the contents of, the account at its sole discretion, thereby permitting it to refuse the personal representatives’ request. Over Chief Justice Gants’ objection, the Court remanded that issue to the probate court for further proceedings on whether the terms of service agreement is an enforceable contract.

Justice Gants assumed for purposes of the opinion that the terms of service agreement is enforceable against the estate. Justice Gants further noted that the terms of service agreement grants Yahoo the right to terminate the agreement and the user’s access and to remove and discard any content within the service’s possession. Yahoo, however, could not contend that the termination provision gave Yahoo an ownership interest in the user’s content. Therefore, even if the terms of service agreement limits the estate’s property rights, Yahoo cannot claim ownership over the content still retained by Yahoo. Nor could the termination provision be reasonably interpreted to allow Yahoo to destroy emails after the personal representatives initiated a court action to obtain the messages. Justice Gants noted it was unfair to put the estate through the expense of another court proceeding and dissented from the majority’s decision to remand the case for further proceedings regarding the terms of service agreement.

Key Takeaways and Possible Future Developments

Given that this case has been remanded, it is far from concluded. However, even though the decision does not order Yahoo to disclose the emails to the personal representatives, the decision negates the email industry’s position that the Act prohibits disclosure. In and of itself, that is significant for personal representatives who seek access to internet communications of the deceased individual’s estate that they are administering.

Presumably, the Massachusetts probate court, on remand, will simply issue an order mandating disclosure, now that the SJC has confirmed that the personal representative may provide lawful consent under the Act. But what if the probate court, on remand, does not order the disclosure, and instead agrees with Yahoo that its terms of service agreement allows the company to destroy or withhold the emails? Chief Justice Gants indicates that if the trial court were to hold that Yahoo’s terms of service agreement were binding on the parties and permitted Yahoo to destroy the decedent’s email messages, the SJC “would surely reverse that ruling.”

Practitioners have begun to include specific authorizing language in their estate planning documents that addresses a fiduciary’s rights relative to an individual’s digital assets. These explicit directions should squarely address the lawful consent exception raised by the Act.

The SJC also suggested, in a footnote, that nothing precludes the Legislature from regulating the inheritability of digital assets. A majority of states have addressed the issues presented by Ajemian by enacting the Revised Uniform Fiduciary Access to Digital Assets Act (“RUFADAA”). RUFADAA was drafted through a collaborative effort between fiduciary professionals and internet service providers. RUFADAA extends the traditional power of a fiduciary to manage tangible property to include management of a person’s digital assets. As a compromise between the drafting parties’ interests, RUFADAA allows fiduciaries to manage digital property, but restricts a fiduciary’s access to electronic communications such as email, text messages, and social media accounts unless the original user consented to this access in a will, trust, power of attorney, or other record. There are currently several bills pending before the Massachusetts Legislature relating to varying forms of access by fiduciaries to digital assets. A Massachusetts Study Committee has recommended the adoption of RUFADAA in Massachusetts, but as of yet, RUFADAA has not been formally filed as a bill in the Commonwealth.

Mary H. Schmidt, Esq. is a partner at Schmidt & Federico and is a member of the Massachusetts Ad Hoc RUFADAA Study Committee. Colin Korzec is a National Estate Settlement Executive at U.S. Trust, Bank of America Private Wealth Management and Chair of the Massachusetts Ad Hoc RUFADAA Study Committee.

by David R. Geiger and Richard G. Baldwin

Legal Analysis

On July 21, 2017, in Organic Mulch & Landscape Supply of New England LLC v. Probec, Inc.[i]the United States District Court for the District of Massachusetts dismissed a groundskeeping supply business’s breach of warranty claims against a manufacturer to recover the purchase price, repair costs and lost profits from allegedly defective ice bagging equipment because plaintiff bought the equipment from a distributor rather than directly from the manufacturer. The court further denied plaintiff’s motion to certify to the Massachusetts Supreme Judicial Court (“SJC”) the question of whether privity was required for a commercial plaintiff’s warranty claim for economic loss, reasoning that the “answer is clear in the case law.” In support, the court asserted that since the late 1990s courts have “uniformly” required privity under these circumstances, citing opinions from four different Massachusetts federal judges.

This authority, however, appears to be at odds with the plain language of Mass. Gen. L. ch. 106, § 2-318, which provides:

Lack of privity between plaintiff and defendant shall be no defense in any action brought against the manufacturer . . . to recover damages for breach of warranty, express or implied, or for negligence . . . if the plaintiff was a person whom the manufacturer . . . might reasonably have expected to use, consume or be affected by the goods.

As discussed below, the Massachusetts federal court’s departure from the statutory language rests on a tenuous basis, particularly in light of the statute’s history and interpretation by the SJC, and raises significant practical and policy concerns.

The Path To The Federal Court Rule

The original version of § 2-318 abolished the privity requirement only for breach of warranty claims by a “natural person who is in the family or household of [the] buyer or who is a guest in his home . . . and who is injured in person” by a warranty breach.[ii] In 1971, the section was re-written to extend the abolition to “any action . . . to recover damages for breach of warranty, express or implied, or for negligence” by “a person whom the manufacturer . . . might reasonably have expected to use, consume or be affected by the goods.” In 1973, the legislature added a two-year statute of limitations for “all actions under this section,” and in 1974 extended it to three years.[iii]

For nearly twenty-five years, the 1971 amendment to § 2-318 was consistently interpreted to have eliminated the privity defense in all warranty cases.[iv] Even the Massachusetts federal court opinions noted above agree on this,[v] but they cite the SJC’s 1989 decision in Bay State-Spray & Provincetown S.S., Inc. v. Caterpillar Tractor Co.[vi] as a turning point in the statute’s interpretation.

The issue in Bay State-Spray was not privity, however, but which of two “literally appli[cable]” statutes of limitations governed a warranty claim for repair costs and lost profits against the manufacturer of an allegedly defective engine in a ferry sold to plaintiff by a shipyard. Section 2-318 establishes a three-year statute of limitations from the date of injury for actions “under this section,” which includes warranty claims, but Mass. Gen. L. ch. 106, § 2-725 imposes a four-year limitations period generally running from the date of sale for actions “for breach of any contract,” including “breach of warranty.” The SJC viewed the legislature as having two purposes in expanding § 2-318: “to eliminate requirements of privity and to express new principles of strict liability for personal injuries and property damage caused by a seller’s breach of warranty.” Based on the latter, the court reasoned that the limitations period of § 2-318 governed “tort-based warranty claims,” in which the product causes personal injury or damage to property other than the product itself, while that of § 2-725 governed “contract-based warranty claims,” in which the product causes only economic loss or damage to the product itself. As plaintiff’s claim was contract-based and brought more than four years after the sale, § 2-725 applied and barred the claim. In a footnote, the SJC mentioned that defendant had not argued that plaintiff’s lack of privity barred the claim.

Six years later, the United States District Court for the Southern District of New York in Hadar v. Concordia Yacht Builders[vii] relied on Bay State-Spray to conclude that Massachusetts law required privity for contract-based warranty claims. In Hadar, a yacht owner sued his shipbuilder and the distributors and manufacturers of epoxy resin and fabric used to construct the ship for a cosmetic defect allegedly caused by incompatibility between the resin and fabric. The distributor and manufacturer defendants asserted that lack of privity barred plaintiff’s warranty claims. The court interpreted Bay State-Spray to hold that § 2-725—which is entitled “Statute of Limitations in Contracts for Sale”—governed all aspects of contract-based warranty claims and that § 2-318 is inapplicable to such claims. The court reasoned that although Bay State-Spray “involved” statute of limitations issues, the SJC “did not limit its discussion of the scope of section 2-318 to [such] issues.” Because § 2-725 does not address privity, the court held Massachusetts still required it for contract-based warranty claims.

Less than a month later, however, the SJC held in Jacobs v. Yamaha Motor Corp., U.S.A.,[viii] that privity was not required for the purchaser of a consumer product to recover from its manufacturer for contract-based warranty claims. The court noted that Mass. Gen. L. ch. 106, § 2-316A expressly prohibits a “manufacturer of consumer goods”[ix] from disclaiming or limiting implied warranties or remedies for their breach, thus creating the “implication” that such a manufacturer indeed “makes an implied warranty . . . to the consumer,” i.e., that privity is not required. Moreover, § 2-318 is even “[m]ore explicit” and “on its face invalidate[d]” the manufacturer’s privity argument, since the statute’s abolition of the privity requirement “is not limited to recovery for personal injury but rather refers [more broadly] to ‘damages’ for breach of warranty,”—unlike two of the three official UCC alternatives for the section. The SJC also noted that Massachusetts’ § 2-318 is “at least as broad as,” and in some respects “goes beyond,” the UCC’s broadest Alternative C, which had been interpreted by courts across the country as permitting consumers to recover for non-personal injury warranty claims absent privity.[x]

While the Jacobs Court noted Bay State-Spray’s conclusion that § 2-318 had been enacted with a tort “focus,” it reasoned that focus should not “inhibit the independent development of the law concerning warranties.” Acknowledging in dicta the possibility that “[c]ontract-based warranty claims involving commercial transactions may generally call for different treatment than tort-based warranty claims,” the SJC asserted that buyers of consumer goods “deserve separate consideration because of the special legislation affecting them.” The court explained it was responding to this treatment by interpreting sections 2-316A and 2-318 to abolish the privity requirement for a buyer of consumer products to bring a contract-based warranty claim against the manufacturer.

Following Jacobs, developments in the Hadar litigation caused the New York court to revisit its prior ruling.[xi] Acknowledging the decision in Jacobs, but noting that its holding was limited to buyers of consumer products, the court retained its original conclusion for contract-based warranty claims “arising in the context of commercial transactions.” The court did not address the fact that its original decision was premised on § 2-725, while Jacobs did not even cite that section, much less say that it governed all aspects of contract-based warranty claims. Nor did the court acknowledge Jacobs’ affirmative reliance on § 2-318’s plain language that was “explicit” in its abolition of the privity requirement, including for economic loss claims, and was at least as broad as—and in some respects went beyond—UCC Alternative C.

Seven months later, the Massachusetts federal court in Sebago, Inc. v. Beazer East, Inc.[xii] adopted Hadar’s interpretation of Bay State-Spray and Jacobs to conclude that, under Massachusetts law, “commercial plaintiffs must allege privity to maintain a breach of warranty action against a manufacturer.” Later opinions of the Massachusetts federal courts follow Sebago and its analysis, generally without citing Hadar.[xiii]

The SJC’s Subsequent Decision in Theos & Sons

The SJC has not subsequently revisited the possibility raised in Jacobs that commercial contract-based warranty claims may warrant different treatment than tort-based warranty claims or, more pertinently, whether such claims should be treated differently from consumer contract-based warranty claims, which Jacobs explicitly held did not require privity.[xiv] But at least one post-Jacobs case strongly suggests the court does not view privity as a requirement even for commercial contract-based warranty claims.

In Theos & Sons, Inc. v. Mack Trucks, Inc.,[xv] a business that bought a commercial truck second-hand from another business sued the manufacturer for breach of the implied warranty of merchantability to recover for economic losses from failure of the truck’s engine. The SJC affirmed dismissal of plaintiff’s claim because the manufacturer had effectively disclaimed any implied warranty in its sale to the first buyer, holding that the disclaimer was effective against any subsequent buyer, even one unaware of the disclaimer. In reaching its conclusion, the SJC specifically noted that “§ 2-318 extends all warranties . . . to third parties who may reasonably be expected to use the warranted product,” without making any distinction between consumer or commercial transactions, and observed that while § 2-318 itself did not explicitly address the effects of warranty disclaimers on remote plaintiffs, the section’s comments did. Theos & Sons thus strongly implies that the court may view § 2-318’s abolition of the privity requirement for contract-based warranty claims as equally applicable to both commercial and consumer products.

Practical and Policy Concerns

Although the Massachusetts federal court decisions requiring privity apply only to commercial buyers and contract-based warranty claims, the decisions nonetheless have considerable practical and policy consequences. For example, commercial buyers that purchase through intermediaries such as distributors may lack a remedy if their immediate seller becomes insolvent. Indeed, that may be the outcome in Organic Mulch, where the court dismissed plaintiff’s claims against the manufacturer for lack of privity but claims against the distributor have been stayed by its bankruptcy filing.

While insolvency may be a comparatively rare occurrence, the federal court rule will almost always have litigation consequences. For example, since the manufacturer inevitably possesses the most critical information and documents concerning any alleged product defect, a plaintiff limited to suing its immediate seller must incur the additional burden of pursuing third-party discovery from the manufacturer to obtain information necessary to prosecute its claim. In addition, the rule is likely to foster multiple litigations: each party in the sales chain would have to bring a suit against the entity with which it was in privity until liability ultimately reaches the manufacturer.

The federal court rule also has significant policy consequences. For one, preventing suits against manufacturers that sell indirectly fails to situate liability, and the corresponding economic incentive, on the truly responsible entity. The SJC has noted in the tort context that the law seeks to impose liability on the party in the best position to prevent or remedy a product defect.[xvi] This principle should be not be rendered inapplicable by the happenstance that the product caused only economic loss, creating a contract-based claim, rather than personal injury or property damage that would create a tort-based claim. Moreover, to the extent the federal court’s position diverges from that of the state court’s, a manufacturer’s liability will turn not on its culpability but rather whether plaintiff’s claims can be removed to federal court.

In addition, interpreting § 2-318 contrary to its seemingly unambiguous meaning may run afoul of the SJC’s requirement that courts must “carry out the legislature’s intent, determined by the words of a statute interpreted according to the ordinary and approved usage of the language.”[xvii]

In light of this fundamental principle, Jacobs’ statement (albeit in the context of a consumer claim) that § 2-318 is “explicit” in abolishing the privity requirement for contract-based warranty claims and Theos & Sons’ strong implication that this abolition is as applicable to commercial as to consumer plaintiffs, courts and litigants would benefit by the SJC’s finally resolving the issue. Accordingly, a future federal court may want to consider requesting such a resolution. Alternatively, a direct state court appeal may provide the SJC that same opportunity.

[x] 420 Mass. at 328–29. The UCC’s § 2-318 is captioned “Third Party Beneficiaries of Warranties Express or Implied” and provides three alternatives for state legislatures. Alternative A is the version Massachusetts adopted in 1957. CompareBay State-Spray, 404 Mass. at 108 n.6 with Jacobs, 420 Mass. at 328 n.4. Alternative B abolishes the privity requirement for “any naturalperson who may reasonably be expected to use, consume or be affected by the goods and who is injuredin person” by a warranty breach. Jacobs, 420 Mass. at 328 n.4. Alternative C abolishes the defense for “any person who may reasonably be expected to use, consume or be affected by the goods and who is injured” by a warranty breach, the only alternative that “concerns more than personal injury.” Id. Massachusetts’ current § 2-318, captioned “Lack of Privity in Actions Against a Manufacturer, Seller or Supplier of Goods,” like Alternative C, contains no limitation either to “natural” persons or injury “in person,” but is even broader in that, for example it also governs claims “for negligence.”

[xiv] In Canal Electric Co. v. Westinghouse Electric Corp., an opinion on certified questions, the SJC declined to address whether a commercial plaintiff would be barred from recovering purely economic losses from the manufacturer of an allegedly defective generator absent privity, as that question was not certified to the Court. 406 Mass. 369, 370 n.1 (1990).

[xvi]E.g., Colter v. Barber-Greene Co., 403 Mass. 50, 57 (1988) (“We hold a manufacturer liable for defectively designed products because the manufacturer is in the best position to recognize and eliminate the design defects.”).

Mr. Geiger and Mr. Baldwin are partners in the litigation department of the Boston office of Foley Hoag LLP. They are both members of the firm’s Product Liability and Complex Tort Practice Group, of which Mr. Geiger is the chair.

by José P. Sierra

The Profession

During the Spring and Fall legal conference seasons, emails addressing “data breaches,” “improving cyber defenses,” and “what you (or your general counsel/board) need to know about cyber security/insurance,” hit our inboxes on an almost weekly basis. Although it took some time, everybody now wants a slice of hot “cyber” pie, and law firms have been quick to jump on the cyber security bandwagon and form cyber-practices. What hasn’t gotten the same rapt attention of conference organizers, tech vendors, and the legal community is the coming age of artificial intelligence, or “AI.” There are at least two reasons for this. First, although large-scale deployment of self-driving cars is just over the horizon, most of the bigger, life-changing AI products are still years away. Second, most laypeople (including lawyers) do not understand what AI is or appreciate the enormous impact that AI technology will have on the economy and society. As a result, those in the “vendor” community (which includes lawyers) have yet to determine how their clients and their clients’ industries will be affected, and how they themselves can profit from the AI revolution.

AI and What It Will Mean for Everyone

AI may be defined as a machine or super computer that can simulate human intelligence by acquiring and adding new content to its memory, learning from and correcting its prior mistakes, and even enhancing its own architecture, so that it can continue to add content and learn. A few years ago, AI development and its celebrated successes were limited to machines out-playing humans in games like chess (e.g., IBM’s Watson beating world chess champion Gary Kasparov and winning on the show, Jeopardy). And while most of us are now familiar with “intelligent” assistants like “Siri,” “Alexa,” and other “smart” devices, for the average person, the full import of AI’s capabilities and potential hasn’t been grasped (though the advent of autonomous cars has given us some glimpse of things to come).

Already, AI can do many things that people can do (and in some cases better). In addition to driving cars, AI can detect and eliminate credit card payment fraud before it happens, trade stocks, file insurance claims, discover new uses for existing drugs, and detect specific types of cancer. Then there is the work that most people think can be done only by humans, but which AI can do today, including: (1) predicting the outcome of human rights trials in the European Court of Human Rights (with 79% accuracy); (2) doing legal work – numerous law firms have “hired” IBM’s Ross to handle a variety of legal tasks, including bankruptcy work, M&A due diligence, contracts review, etc.; and, more disturbing than possibly replacing lawyers, (3) engaging in artistic/creative activities, like oil canvas painting, poetry, music composition, and screenplay writing. In short, almost no realm of human endeavor – manual, intellectual, or artistic – will be unaffected by AI.

What AI Will Mean for Lawyers

Some legal futurists think that AI simply will mean fewer jobs for lawyers, as “law-bots” begin to take over basic tasks. Other analysts focus on the productivity and cost-savings potential that AI technology will provide. Two other considerations of the impending AI revolution merit discussion: revenue opportunities and the role lawyers can and should play in shaping AI’s future.

How AI May Shape the Legal Economy

Some of the most profitable practice areas in an AI-driven economy are likely to be:

Patent Prosecution and Litigation. This one should be obvious and already has taken off. Fortunes will be made or broken based on which companies can secure and defend the IP for the best AI technologies.

M&A. Promising AI start-ups with good IP will become targets for acquisition by tech-giants and other large corporations that want to dominate the 21st century economy.

Antitrust. Imagine that Uber, once it has gone driverless, decides to buy Greyhound and then merges with Maersk or DHL shipping, which then merges with United Airlines. How markets are (re)defined in an AI-driven economy should keep the antitrust bar very busy.

Labor and Employment. AI technology has the potential to disrupt and replace human labor on a large-scale. To take just one example, in an AI-created driverless world, millions of car, taxi, bus, and truck drivers will find themselves out of work. What rights will American workers have when AI claims their jobs? How will unions and professional organizations protect their members against possible long-term unemployment? Labor and employment lawyers will be at the forefront of labor re-alignment issues.

Tax. If AI reduces the human labor pool, as expected, and there is a corresponding loss in tax revenue, the tax code will most likely need to be revised, which will mean new strategies for the tax bar.

Cyber-law/compliance. The importance of protecting IP, proprietary, and confidential information, and the legal exposure of not doing so, will be even greater in the higher-stakes world of AI.

Criminal Defense. Will AI help law enforcement solve crimes? Will AI be used to commit crimes? If so, both prosecutors and the defense bar will be busy prosecuting and representing more than the typical criminal defendant.

How Lawyers May Help Shape AI

Is there a role for the legal profession in the coming AI age other than helping our clients adapt to a “brave new world?” In my view, lawyers should play a necessary and leading role. For if AI has the potential to affect every industry and occupation and permanently eliminate jobs along the way, society’s leaders cannot afford to leave the decisions about which AI technologies will be developed in what industries (and which ones won’t) to sheer market forces. Private industry and investors are currently making these decisions based on one overarching criterion — profit — which means everything is on the table. Although that approach propelled the industrial and digital revolutions of the last two centuries, jobs lost by those revolutions were eventually replaced by higher-skilled jobs. For example, teamsters of horse-powered wagons were replaced by modern teamsters, i.e., truck drivers. That won’t be the case following an AI revolution. The ultimate question, therefore, in the coming AI century is what areas of human endeavor do we, as a society, want to keep in human hands, even if such endeavors can be accomplished faster, cheaper, and better by AI machines? As the profession responsible for protecting society’s interests through law and policy, lawyers cannot afford to take a back seat to the free-for-all development of AI, but instead must lead and help shape the AI century to come.

José P. Sierra is partner at Holland & Knight. He focuses his practice in the areas of white collar criminal defense, healthcare fraud and abuse, pharmaceutical and healthcare compliance, and business litigation.

by Ann Balmelli O’Connor

Case Focus

To many, the Supreme Judicial Court’s holdings in Care and Protection of Walt, 478 Mass. 212 (2017)—that the Department of Children and Families (“DCF”) must comply with the law, that courts must ensure that DCF complies with the law, and that where parents or children are harmed by DCF’s breach of its legal obligations, a court may enter orders to remediate the harm —must seem unremarkable. But to attorneys who represent parents and children in state-intervention child custody cases, the decision is a welcome step towards realizing the law’s expectation that removing a child from his parents will be DCF’s “last resort.” Walt at 219.

Since 1954, the commonwealth’s policy has been to remove a child from his parents “only when the family itself or the resources available to the family are unable to provide the necessary care and protection[.]” Id. at 219, citing G.L. c. 119, § 1. When a court awards custody of a child to DCF, the court must determine whether or not DCF made reasonable efforts to “prevent or eliminate the need” to remove the child from his parent(s). G.L. c. 119, § 29C. There are four exceptions to DCF’s reasonable efforts obligation; unless an exception applies, DCF must make reasonable efforts before removing a child. Id. But for many years, juvenile courts routinely have excused DCF’s failure to make reasonable efforts for reasons beyond the statutory exceptions. Walt was one of those cases.

In Walt, DCF made no effort to avoid removing a three-year-old child from his parents because the investigating social worker believed Walt was at immediate risk of harm in the home. A trial judge, citing that risk, excused DCF’s failure to make reasonable efforts to avoid removing Walt. An Appeals Court single justice deemed that ruling error and, because DCF’s breach of its duty to make reasonable efforts had harmed Walt and his father by hindering their reunification, the single justice entered orders for visits and services in order to facilitate Walt’s return to his father’s custody. The single justice reported the issues to a panel of the Appeals Court, and the SJC transferred the case on its own motion.

On appeal, DCF argued that the trial judge only needed to determine whether DCF made reasonable efforts at an initial (usually ex parte) hearing on DCF’s request for emergency custody, not at a later 72-hour hearing. And at the ex parte hearing in Walt, the judge had determined that DCF did make the required efforts. The SJC rejected DCF’s argument and held that G.L. c. 119, § 24 plainly requires that the determination be made at both hearings. Walt at 223-224. The Court noted that the wisdom of requiring that the matter be revisited at the later (adversarial) hearing was illustrated in Walt, where the social worker’s ex parte claims regarding reasonable efforts were shown at the 72-hour hearing to have been “simply not true.” Id. at 225.

DCF next urged that the Court create an “exigent circumstances” exception to § 29C, which would excuse DCF from its duty to make reasonable efforts to avoid removing a child where a parent subjected the child “to serious abuse or neglect or an immediate danger of serious abuse or neglect.” Id. at 226. The Court declined to read that exception into § 29C, since the Legislature did not include it. The Court noted that “a judge must determine what is reasonable in light of the particular circumstances in each case, that the health and safety of the child must be the paramount concern, and that”—regardless of whether or not DCF made reasonable efforts—“no child should remain in the custody of the parents if his or her immediate removal is necessary to protect the child from serious abuse or neglect.” Id. at 225, 228.

DCF also claimed that the single justice exceeded his authority in ordering DCF to provide multiple father-son visits each week, permit Walt’s father to participate in special education meetings, and explore housing options for the family. The SJC disagreed; because DCF had violated its legal obligation to make reasonable efforts to avoid removing Walt, the single justice properly exercised his equitable authority in ordering DCF “to take reasonable remedial steps to diminish the adverse consequences of its breach of duty.” Id. at 228. Because the single justice acted long after Walt had been removed from his parents, he correctly entered orders designed to facilitate reunification. The Court observed that a juvenile court judge has the same authority. Id. at 228, 231.

As to the order for visitation, or “parenting time,” the Court stated that DCF’s schedule of one-hour visits every other week “imperil[ed] the father-son bond that was essential” to reunification Id. at 230. Accordingly, the single justice properly ordered a schedule “that would enable that bond to remain intact.” Id. (citations omitted). Equity likewise warranted the order that Walt’s father be permitted to remain involved in his education. Finally, because the parents would likely have difficulty obtaining housing benefits because Walt was in DCF’s custody—and housing “was likely a prerequisite to family reunification”—the single justice properly ordered DCF to explore housing options for the family. Id. at 230.

DCF has been removing children from their homes at higher rates over the past several years, and the foster care system is overwhelmed. Too often, DCF has removed these children without offering, let alone providing, any services or other assistance to their families. With this decision, the SJC has helped to ensure that DCF will follow the law, so that separating families and placing children in an overburdened foster care system truly will be the agency’s last resort.

Ann Balmelli O’Connor is the Attorney-in-Charge of the Appellate Unit of CPCS’s Children and Family Law Division. Attorney O’Connor, a former Assistant General Counsel for DCF, represented the child’s father in Care and Protection of Walt.

by Hon. Peter B. Krupp

Voice of the Judiciary

Many times a day in a criminal session judges decide whether setting an affordable bail will be sufficient to ensure a defendant will appear for future court dates. I have set or reviewed bail in hundreds of cases. I have rarely set bail with great certainty and almost always have had to decide based on woefully imperfect information.

There are serious risks of getting it wrong. If a defendant flees, justice for a victim may be substantially delayed or denied; releasing a violent or drug addicted defendant may create a risk to public safety; and setting unaffordably high bail for a defendant may have long-term effects on the defendant, even if an acquittal follows. Compounding the problem, bail decisions usually must be made quickly, so they are disproportionately susceptible to explicit and implicit biases; and the popular press does not help, usually reporting bail as a judicial critique on the severity of the crime rather than an individualized assessment of the defendant’s likelihood of appearing on the charges.

Given these challenges, much depends on effective advocacy by lawyers who must marshal relevant facts and information. Enter the Supreme Judicial Court in Brangan v. Commonwealth, 477 Mass. 691 (2017), which trained a fresh spotlight on the reasons for bail. Although it did not purport to change the law, Brangan, at a minimum, collected and clearly articulated the foundational principles underlying bail, re-centering judges and advocates on what matters and what does not. Before addressing the need for more effective and targeted advocacy, however, a quick overview may be useful.

At a defendant’s initial appearance, the Commonwealth may in certain serious cases move under G.L. c. 276, § 58A to detain a defendant without bail as dangerous. A petition for detention under § 58A triggers the right to an evidentiary hearing to decide whether the defendant is dangerous and, if so, whether a combination of financial and nonfinancial terms can reasonably assure the safety of others and the community. If no such conditions are available, the defendant is held without bail.

In the great bulk of cases, the Commonwealth does not or cannot seek detention under § 58A, but asks that bail be set to assure the defendant’s appearance at future court proceedings. The state and federal constitutions prohibit “excessive” bail, that is, bail “‘higher than an amount reasonably calculated to’ . . . assur[e] the presence of the accused at future proceedings.” Brangan, 477 Mass. at 699, quoting Stack v. Boyle, 342 U.S. 1, 5 (1951). When it comes to bail, one size does not fit all. One size does not even fit all people who commit the same crime. Bail decisions require individualization. As the SJC wrote, “bail that is set without any regard to whether a defendant is a pauper or a plutocrat runs the risk of being excessive and unfair.” Brangan, 477 Mass. at 700. Therefore, the court must determine how much the particular defendant is able to pay, and may set bail “no higher than necessary to ensure the defendant’s appearance.” Id. at 701.

Where no § 58A petition has been filed, “[u]sing unattainable bail to detain a defendant because he is dangerous is improper”; a “judge may not consider a defendant’s alleged dangerousness” in setting the amount of bail, although dangerousness may be considered in setting conditions of release. Id. at 701, 706. Therefore, arguments that a defendant poses a danger to the community, is a threat to public safety or a security risk, has been convicted of rape, failed to register as a sex offender, or had abuse prevention orders issued against him, may be properly advanced in a § 58A hearing, but not for setting the amount of bail, id. at 706-707, at least not unless they reflect directly on the defendant’s likelihood of appearing at future court dates.

A judge must set an affordable bail if it will cause the defendant to appear on future court dates. A bail greater than what the defendant can reasonably afford, but no higher than necessary to ensure the defendant’s appearance, may only be set if the judge issues “findings of fact and a statement of reasons . . . either in writing or orally on the record.” Id. at 707. A new Superior Court form has been issued for these purposes.

In light of these principles, advocacy must evolve to address the only purpose for setting bail: to ensure the defendant will appear at future court proceedings. Certain factors considered in the bail determination, see G.L. c. 276, § 57, par. 2; G.L. c. 276, § 58, par. 1, bear more directly on the risk of non-appearance (e.g., prior defaults, flight from arrest, strong family ties outside Massachusetts, a strong case against the defendant, a high potential penalty), while others bear less directly (e.g., prior 209A orders, prior convictions, open probation matters). Myriad other factors are relevant, including a defendant’s work history, medical condition, and age.

A few examples may help illustrate how prosecutors and defense attorneys need to think through the bail issues that apply to their particular defendant:

Ability to Post Bail. If the defendant has access to resources (or not), inform the court. Bring in tax returns, pay stubs, or an affidavit from the defendant’s employer. “The defendant tells me . . .” or “the police believe . . .” are not particularly persuasive. Put together a sworn statement addressing the defendant’s assets, or explaining where the proposed bail money is coming from and what the financial resources are of the people posting bail. What amount of bail has the defendant posted in earlier cases?

Prior Court Experience. If the defendant has previously been on bail, did the defendant default or appear? The Court Activity Record Information printout (“CARI,” formerly known as the “BOP”) does not show what bail was previously set, whether the defendant was able to post bail, the defendant’s history of appearing in court, or the reason for a default; and it is not always accurate or complete. Does the defendant have a record outside the Commonwealth? There is no substitute for getting docket sheets on a defendant’s prior cases from Massachusetts and other jurisdictions. If a prosecutor wants to rely on a defendant’s failure to remove an earlier default for four months, she should come prepared with documents demonstrating the defendant was not being held on another matter at the time.

Mental health/substance abuse. If the defendant has a drug problem or untreated mental health issue, be prepared to address where the defendant will live, or who the defendant will live with, to mitigate the risk that the defendant will not appear for court. How will medication compliance be monitored? Was defendant’s substance abuse problem addressed in earlier cases?

Effective bail advocacy in the Superior Court requires preparation to dig up information about a defendant’s past and present, information that is at least in some measure available to both the prosecution and the defense. This is often difficult and time-consuming and can rarely be done well on the fly. While a defendant has a right to a prompt bail hearing, in some cases counsel should be prepared to postpone a bail hearing so that information important to the bail determination may be gathered.

In this regard, bail presentations frequently suffer from the Committee for Public Counsel Services (and some district attorneys’ offices) acquiescing to bail appeals being prosecuted or defended by stand-in counsel representing the defendant or the Commonwealth in the Superior Court only for the bail appeal. See, e.g., CPCS Assigned Counsel Manual Policies and Procedures, Ch. IV, Part I, Sec. II.C.5 (“Counsel should facilitate the bail appeal procedure . . . [and] whenever possible, . . . represent the client at the hearing. (Emphasis added)). Most bail arguments cannot be assembled in an hour and should not be based on a quick read of the police report or a short interview with the defendant. Continuity of counsel is crucial. Whatever policies deter bar advocates from handling their district or municipal court clients’ bail appeals should be remedied to assure effective representation during this important phase of a criminal case.

Brangan has focused attention on the issue relevant in setting bail. Hopefully its clarity will also improve bail advocacy and cause lawyers on both sides of a case to assemble reliable facts and documents bearing on whether a defendant is likely to appear at future court proceedings.

Judge Peter B. Krupp has served as an Associate Justice of the Superior Court since 2013. He is a member of the Board of Editors of the Boston Bar Journal.

While trends indicate that companies intend to continue to move away from standard employer-employee arrangements, the legal landscape for on-demand workers is far from resolved. The classification of on-demand workers as “independent contractors” means there is a growing class of workers that do not have access to employment benefits such as vacation, sick time, and parental leave. Employers are not paying their share of employment taxes. In addition, these workers do not have access to social safety net programs such as workers’ compensation and are not making social security contributions. As more individuals rely on freelance work as their primary means of income, these workers are left without the protections traditional employment provides. As a result, the courts, legislatures, and companies both in the United States and abroad struggle with how to classify these workers and provide them with some access to benefits. This article summarizes and contrasts some of the different approaches that have been taken since the author first addressed this topic in this journal, and addresses why they matter to businesses in the Commonwealth.

Companies that used independent contractors rather than employees to fuel their global growth, such as Uber, Lyft, and Postmates, continue to face legal challenges to their business practices regarding worker classification. Several worker-misclassification claims have been settled at significant expense. In April 2017, the food-delivery business DoorDash agreed to pay $5 million to settle a 2015 independent contractor misclassification class action involving 33,744 class members. In March 2017, rideshare company Lyft’s $27 million settlement was approved by the court to resolve a misclassification suit brought by approximately 95,000 drivers. Although in both cases the companies agreed to pay money to settle claims, neither company agreed to reclassify independent contractors as employees. Instead, each company agreed to clarify its internal policies and provide additional rights for its independent contractor workforce, including limitations on when Lyft may deactivate drivers and an opportunity to be heard in an arbitration paid for by Lyft to challenge the basis for deactivation.

Given that the settlements did not require these companies to re-classify their independent contractors as employees, they may find themselves facing further litigation on this subject. For example, in another case, delivery company Postmates received judicial approval for its $8.75 million settlement of misclassification claims in September 2017 in Singer et al. v. Postmates Inc., Case No. 4:15­cv­01284 (N.D. Cal.). However, Postmates is facing a new misclassification action filed in state court in November 2017, meaning that Postmates will need to settle or litigate these same claims anew.

Only one misclassification suit has made it to trial so far. A six-day bench trial in Lawson v. Grubhub, Inc., Case No. 15-cv-05128 JSC (N.D. Cal.) was concluded with closing arguments at the end of October 2017. On February 8, 2017, the court issued its decision finding that the plaintiff was properly classified as an independent contractor. The court applied California’s 11-factor “economic realities” test set forth in S.G. Borello & Sons Inc. v. Dept. of Industrial Relations, 48 Cal.3d 341 (1989), under which the alleged employer bears the burden of proving that the worker in question is not an employee. The court found “While some [of the Borello] factors weigh in favor of an employment relationship, Grubhub’s lack of all necessary control over Mr. Lawson’s work, including how he performed deliveries and even whether or for how long, along with other factors persuade the Court that the contractor classification was appropriate for Mr. Lawson during his brief tenure with Grubhub.”

While the 11-factor Borello test[i] sets forth a different independent contractor test than is applied in Massachusetts,[ii] the results of this case will be felt across the U.S. because most prominent on-demand companies are based in California, and California law will likely apply to much of the worker litigation due to California choice of law and choice of venue provisions in agreements with independent contractors across the U.S.[iii]

Of on-demand businesses, ride-sharing giant Uber continues to reign supreme in both its ability to get press coverage and in the sheer volume of legal action it has faced globally for its classification of workers as independent contractors. On balance, the international results for Uber have been decidedly negative, but it is making some progress in the U.S., which reflects how Europe and the U.S. differ on their approaches to worker protection and Europe’s more skeptical view of the use of independent contractors instead of employees.

In April 2016, Uber attempted to resolve its largest worker misclassification class action in O’Connor v. Uber Technologies, Inc., C13-3826 EMC (N.D. Cal.), for $100 million covering 385,000 drivers. However, the proposed settlement was rejected by the court as not “fair, adequate, and reasonable” and because it did not make a determination of how to classify drivers. This case was complicated by the 9th Circuit’s decision in Mohamed v. Uber Technologies, 836 F.3d 1102, 1008 (9th Cir. 2016), which determined that pursuant to agreements between Uber and the drivers, the drivers’ claims against Uber must be arbitrated. Following the decision in Mohammed¸ Uber managed to persuade an arbitrator in an arbitration with a single California driver that such driver was properly classified under the Borello test as an independent contractor, and was not an employee.

An additional blow to on-demand companies that rely on independent contractors in Europe was delivered by the ECJ in King v. The Sash Window Workshop Ltd., which ruled that misclassified self-employed contractors who are really workers or employees could claim back holiday pay all the way back to the year that the EU’s Working Time Directive[iv] was introduced. Before this ruling, liability was typically limited to one or two years’ back pay in most EU countries.

So, what is being done in the U.S. and Europe at the legislative level to introduce protections for this growing class on freelance workers? In the U.S., an assortment of legislative efforts seek to provide them access to benefits typically provided in the employment relationship. New York City enacted the “Freelance Isn’t Free Act” to impose penalties on companies that fail to pay their contractors, which the city may enforce. New York State established the Black Car Fund, which administers safety and health programs that benefit for-hire drivers, their passengers, and other New Yorkers on the road, and provides workers’ compensation insurance to black car and luxury limousine drivers. Bills proposed in Washington State, New Jersey, and New York would require companies that rely on independent contractors (such as Uber and Grubhub) to contribute to a portable benefits fund that would provide health insurance, time off, workers’ compensation, and other benefits. On the Federal level, in May 2017, Senator Mark Warner (D-VA) and Representative Suzan DelBene (D-WA) introduced legislation to test and evaluate innovative portable benefit designs for freelance workers to give independent contractors access to benefits that to date have only been available for employees. But where the co-sponsors of this bill are Democrats in a Republican-controlled Congress, it is unlikely that this bill will gain any real traction before the 2018 election cycle.

It appears that additional initiatives in Europe would continue its seemingly more-protective stance. A July 2017 report commissioned by the U.K. Prime Minister on gig economy working practices sets forth a series of recommendations to improve working conditions for on-demand workers, including the proposal to create a new classification for workers on tech platforms, like Lyft and Postmates. In November 2017, the European Pillar of Social Rights, a set of policy priorities, was jointly signed by the European Parliament (the EU’s legislative body), the European Council (which sets EU policies), and the European Commission (the EU’s executive body) which sets forth 20 key principles, structured around three categories: (1) equal opportunities and access to the labor market; (2) fair working conditions; and (3) social protection and inclusion. These key principles will be implemented over time through legislation across the EU member states.

Currently, the only new legislation in Massachusetts that impacts any on-demand companies involves the 2016 regulations on ridesharing companies that imposed a fee on ride-sharing services and established requirements for background checks, inspections, and insurance. Another new development impacting on-demand companies in Massachusetts occurred in 2017, when Uber introduced a pilot program that allows Massachusetts drivers to purchase workers’ compensation coverage that offers $1 million maximum coverage for medical costs and lost earnings due to a work-related accident.

The on-demand economy shows no sign of slowing down. As a result, innovative legislation or company-led initiatives that will protect these workers by providing new worker benefit programs are essential for the growing freelance workforce’s health and stability. Under the Trump administration, the Department of Labor rolled back Obama era guidance of the “economic realities test” leaving more room for independent-contractor classification than the prior administration. However, the outcome of still pending litigations will likely force changes in policies and the practices of on-demand businesses that will result in additional worker protection. As freelance work continues to grow, Massachusetts may follow other states in finding new ways to provide benefits and protections for these workers. Regardless, when guiding your clients in Massachusetts, the safest bet is still providing full employment benefits to all workers they retain.

Whether the person performing services is engaged in an occupation or business distinct from that of the principal;

Whether or not the work is a part of the regular business of the principal or alleged employer;

Whether the principal or the worker supplies the instrumentalities, tools, and the place for the person doing the work;

The alleged employee’s investment in the equipment or materials required by his or her task or his or her employment of helpers;

Whether the service rendered requires a special skill;

The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision;

The alleged employee’s opportunity for profit or loss depending on his or her managerial skill;

The length of time for which the services are to be performed;

The degree of permanence of the working relationship;

The method of payment, whether by time or by the job; and

Whether or not the parties believe they are creating an employer-employee relationship may have some bearing on the question, but is not determinative since this is a question of law based on objective tests.

[ii] Massachusetts applies a strict “ABC test” for properly classifying an independent contractor. Specifically, “[a]n employer who wants to treat someone as an independent contractor rather than an employee has to show that the work:

[iii] The long-standing Borello test is also undergoing scrutiny in California. Currently, in Dynamex Operations West, Inc. v. Superior Court of Los Angeles County, the California high court is considering whether to adopt a revised test to determine whether an individual is an employee or independent contractor. The California Supreme Court requested briefs addressing whether California law should use an “ABC” test similar to the one used in Massachusetts. Plaintiff’s counsel in the Grubhub case filed a Notice of Supplemental Authority with the District Court regarding the Dynamex matter, however, the court did not delay its decision in Gruhub instead opting to apply the current Borello test in its decision.

[iv] The EU’s Working Time Directive (2003/88/EC) requires EU countries to guarantee the certain minimum rights for all workers and regulates the amount of time people can spend at work in order to protect the health and safety of the European workforce.

Nancy Cremins is the Chief Administrative Officer & General Counsel of Globalization Partners, an International Professional Employer Organization helping companies expand in 150+ countries without the pain of setting up an entity.

This article was updated on March 8, 2018 to reflect the latest development in the case ofaweson v. Grubhub.